^{A cargo ship sits outside of the Port of Elizabeth marine terminal seen from Bayonne, New Jersey, U.S., April 9 2025. | Shannon Stapleton | Reuters}

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The World Trade Organization (WTO) has revised its 2025 global trade forecast sharply upward, projecting trade volume growth of 2.4%, up from the 0.9% estimate in August. The boost comes after a robust first half of the year, fueled by rising demand for AI-related goods, strong emerging market activity, and front-loaded imports into the United States ahead of anticipated tariffs.

However, the outlook for 2026 is much weaker. The WTO cut its previous forecast of 1.8% growth to a mere 0.5%, citing cooling global economic conditions and the extended impact of trade-restrictive measures.

Trade Growth Drivers in 2025

Global trade volumes surged 4.9% year-on-year in H1 2025, underpinned by several factors:

• Front-loading of imports into the U.S. as businesses sought to avoid higher tariffs.
• Macro support through disinflation, strong fiscal policies, and tight labor markets boosting real incomes and spending in major economies.
• AI-related goods demand, including semiconductors, servers, and telecommunications equipment, driving nearly half of the trade expansion. AI-related trade in value terms rose 20% year-on-year, with Asia accounting for two-thirds of the growth and the U.S. for roughly one-fifth.

The WTO highlighted that “trade growth spanned the digital value chain, from raw silicon and specialty gases to devices powering cloud platforms and AI applications.”

The 2026 Slowdown

Despite this year’s momentum, global trade is expected to slow sharply next year. The WTO cited rising tariff measures, ongoing policy uncertainty, and cooling consumer and business confidence as key risks.

Global services exports, although less directly affected by tariffs, are also set to decelerate, slowing from 6.8% growth in 2024 to 4.6% in 2025 and 4.4% in 2026. The interconnection between goods and services means weak goods trade could dampen service sector growth further.

Developed economies are already showing early signs of strain, with slowing manufacturing output, muted employment gains, and weaker income growth.

AI and Emerging Markets: The Silver Lining

The WTO emphasized that continued growth in AI-related goods and expanding trade among emerging markets could provide a medium-term boost to global trade. Investments in AI supply chains, including advanced semiconductors and cloud infrastructure, are becoming central to trade flows.

WTO Director-General Ngozi Okonjo-Iweala noted, “Measured responses to tariff changes, the growth potential of AI, and increased trade among emerging economies helped offset setbacks in 2025. Yet complacency is not an option. Today’s disruptions are a call for nations to reimagine trade and build a stronger foundation for prosperity worldwide.”

Looking Ahead

While 2025 has benefited from unique factors such as AI demand and strategic import timing, policymakers and businesses should prepare for a challenging 2026. The combination of economic cooling, extended tariff impacts, and slower consumer spending could make global trade growth the slowest in years, highlighting the importance of multilateral cooperation and forward-looking trade strategies.